On Our Radar

Why Canadian Solar, Raven Industries, and Stein Mart Slumped Today

Investors have had to deal with sentiment that changes on a dime throughout the past several months, and intraday volatility has become the norm. Thursday's trade initially featured modest gains on hopes that the latest efforts in Europe from monetary policymakers would finally bring an end to its economic hardships in recent years, but investors took comments from central bank officials as indicating a last-gasp effort with uncertain prospects for success. Although the markets finished the day close to the unchanged level, many stocks finished lower on the day, including Canadian Solar , Raven Industries , and Stein Mart .

Canadian Solar fell 13% after reporting its fourth-quarter financial results this morning. The backward-looking results from the solar company were solid, featuring better than expected performance on both revenue and earnings. However, investors balked at the company's forward guidance, which included shipment volumes in a range of 1,085 to 1,135 megawatts in the first quarter and between 5,400 and 5,500 megawatts for the full year. Although costs of production will likely decrease, full-year revenue projections of $2.9 billion to $3.1 billion were less than most investors had looked to see. Even though the company has sought to increase its quality, Canadian Solar shareholders worry that sagging sales could threaten market share in the long run.

Raven Industries declined 19% in the wake of its own fourth-quarter financial report, which included results indicating some extremely challenging conditions for the company. Revenue sank by more than 40%, hitting earnings by 80%. Weak results at all three of its major segments, including engineered films, applied technology, and the Aerostar unit contributed to Raven's weakness. Even though CEO Dan Rykhus remained optimistic about the company's overall prospects, his general comments looking forward were more tempered than they had been in the recent past. With the potential for the coming fiscal year to look as scary as the just-ended year has, investors aren't certain whether Raven will bounce back in the near future.

Finally, Stein Mart finished lower by 12%. The retailer's fourth-quarter results included a substantial drop in adjusted net income, with earnings per share cut nearly in half on a 1.1% drop in comparable-store sales. The company blamed disappointing sales in part on a more competitive promotional environment during the past holiday season, and Stein Mart also reduced the valuations of its inventories. CEO Jay Stein was optimistic about the company's prospects going forward into the key spring season, but the holiday results show just how competitive the general retail industry is right now. Until it can distinguish itself more clearly from the crowd, Stein Mart could remain under pressure.